Rice Lover Company began its operations on January 1, Year XXXI. The following t

Question

Rice Lover Company began its operations on January 1, Year XXXI. The following transactions pertain to the operations of Rice Lover Company for the Year XxXI: )Acquired $40,000 cash from issuing common stock i) Performed services for $12,000 cash. ili) Provided $55,000 of services on account iv) Received $36,000 cash in advance for services to be performed over the next two years (i.e for Years XXX2 andxxx3). v) Incurred $30,000 of other operating expenses on account. vi) Collected $45,000 cash from Accounts Receivable. vii) Paid $4,000 cash for rental expense for the year XXX1 vii) Paid $12,000 (on December 31) for one year's prepaid insurance for Year XXX2. ix) Paid $5,000 cash dividend to shareholders x) Paid $22,000 cash on Accounts Payable Prepare an income statement and cash flow statement for the year XXXi and a balance sheet as of December 31, Year XXXI .

Explanation / Answer

Income statement Service revenue $67,000 $67,000 Less Expenses Operating expense $30,000 rent expense $4,000 $34,000 Net income $33,000 Cash flow Statement Operating activities Net income $33,000 Increase in accounts receivable -$10,000 Increase in prepaid expense -$12,000 Increase in unearned service revenue $36,000 Increase in accounts payable $8,000 $55,000 Investing Financing Common stock $40,000 Cash dividend -$5,000 $35,000 Net cash and cash receivable $90,000 Add Beginning cash ad cash receivable $0 Ending cash and cash receivable $90,000 Balance sheet Assets Cash $90,000 Accounts receivable $10,000 Prepaid expense $12,000 Total assets $112,000 Liabilities Accounts payable $8,000 Unearned service revenue $36,000 Total liabilities $44,000 Shares holders equity Common stock $40,000 Retained earnings (33000-5000) $28,000 Total shareholders equity $68,000 $112,000

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